House Of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Immigration and Border Protection the Honourable Peter Dutton MP)

Schedule 1 - Amendments

Part 1 - Chinese originating goods

Customs Act 1901

Item 1 After Division 1K of Part VIII

10. This item amends the Customs Act by inserting new Division 1L into Part VIII. New Division 1L is headed Chinese originating goods and sets out the rules for determining whether goods are Chinese originating goods and therefore eligible for a preferential rate of customs duty under the Customs Tariff Act. These rules are being inserted to give effect to the Agreement, in particular Chapter 3 of the Agreement.

11. New Division 1L contains seven subdivisions which are set out below.

Subdivision A - Preliminary

12. Subdivision A contains a simplified outline of Division 1L and contains the interpretation provision for that Division.

Section 153ZOA Simplified outline

13. New section 153ZOA sets out a simplified outline of each of the subdivisions B to G of new Division 1L.

New section 153ZOB Interpretation

14. New subsection 153ZOB(1) sets out new definitions for the purposes of Division 1L as follows:

Agreement means the China-Australia Free Trade Agreement done at Canberra on 17 June 2015, as amended from time to time. The Note to this definition indicates that in 2015, the text of the Agreement was accessible through the Australian Treaties Library on the AustLII Internet site.

Australian originating goods being goods that are Australian originating goods under a law of China that implements the Agreement.

Certificate of Origin means a certificate that is in force and that complies with the requirements of Article 3.14 of the Agreement. Article 3.14 sets out the matters that are to be included in a Certificate of Origin.

Chinese originating goods being goods that, under this Division, are Chinese originating goods.

Convention means the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983, as in force from time to time. The Note to this definition indicates that in 2015, the text of the Agreement was accessible through the Australian Treaties Library on the AustLII Internet site.

customs value of goods, which has the meaning given by section 159. In most cases it will be the transaction value but there are other valuation methods if this value cannot be ascertained.

Declaration of Origin means a declaration that is in force and that complies with the requirements of Article 3.15 of the Agreement. Article 3.15 sets out the matters that are to be included in a Declaration of Origin.

Harmonized System means the Harmonized Commodity Description and Coding System (as in force from time to time) that is established by or under the Convention.

The Harmonized System (HS) is the worldwide classification system that has been adopted by all countries that are members of the World Customs Organization. In Australia, the HS has been adopted in the Customs Tariff Act. The HS organises goods according to the degree of manufacture, and assigns classification numbers to all goods. It is arranged into 96 chapters with each chapter being divided into headings, subheadings, and tariff classifications. Under the HS, the chapter, heading (4 digits), and subheading numbers (6 digits) for all goods are adopted by countries using the HS. The Australian Customs Tariff uses an additional two digits for national classification to create 8 digit tariff items.

indirect materials means:

(a)

goods or energy used in the production, testing or inspection of goods, but not physically incorporated in the goods; or

(b)

goods or energy used in the maintenance operation of equipment or buildings associated with the production of goods;

including:

(c)

fuel (within its ordinary meaning); and

(d)

tools, dies and moulds; and

(e)

spare parts and materials; and

(f)

lubricants, greases, compounding materials and other similar goods; and

(g)

gloves, glasses, footwear, clothing, safety equipment and supplies; and

(h)

catalysts and solvents.

This definition implements Article 3.11 of the Agreement that deals with the treatment of neutral elements.

Interpretation Rules which means the General Rules (as in force from time to time) for the Interpretation of the HS provided for by the Convention.

non-originating materials means goods that are not originating materials.

Non-originating materials are goods that are not originating materials because they do not satisfy the requirements of Division 1L in their own right. For example, where frozen crumbed fish fillets are made in China from fish caught in China, coated with herbs and spices imported from Thailand, the fish would be originating materials and the herbs and spices would be non-originating materials.

originating materials means Chinese originating goods that are used in the production of other goods; or Australian originating goods that are used in the production of other goods; or indirect materials.

In some circumstances, in order to determine whether goods that are imported into Australia are Chinese originating goods, and therefore eligible for a preferential rate of customs duty, it may be necessary to have regard to the goods from which the final goods are produced (see Subdivisions C and D).

Originating materials are those goods that are used to produce other goods and that are also Chinese originating goods, which means that in their own right they satisfy the requirements of new Division 1L; or are Australian originating goods under a law of China that implements the Agreement; or indirect materials as defined above.

plant has the same meaning as it has in the Agreement.

produce means grow, raise, mine, harvest, fish, farm, trap, hunt, capture, gather, collect, breed, extract, manufacture, process or assemble.

territory of a non-party has the same meaning as it has in the Agreement, and includes the customs territory of the following members of the World Trade Organization established by the World Trade Organization Agreement:

(a)

Hong Kong, China;

(b)

Macao, China;

(c)

Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.

This definition is relevant for the purposes of new section 153ZOI of the Customs Act which deals with the consignment provision.

territory of Australia means territory within the meaning, insofar as it relates to Australia, of Article 1.3 of the Agreement. In Article 1.3, territory in relation to Australia includes Australia's territorial sea, contiguous zone, the exclusive economic zone and the continental shelf but does include Australia's external territories except Norfolk Island, Christmas Island, Cocos (Keeling) Islands, Ashmore and Cartier Islands, Heard Island and McDonald Island and the Coral Sea Islands.

territory of China which means territory within the meaning, insofar as it relates to China, of Article 1.3 of the Agreement and does not include the customs territory of the following members of the World Trade Organization established by the World Trade Organization Agreement:

(a)

Hong Kong, China;

(b)

Macao, China;

(c)

Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.

World Trade Organization Agreement means the Marrakesh Agreement establishing the World Trade Organization, done at Marrakesh on 15 April 1994. The Note to this definition indicates that in 2015, the text of the Agreement was accessible through the Australian Treaties Library on the AustLII Internet site.

15. The regional value content of goods for the purposes of Division 1L is to be worked out in accordance with the regulations. The regulations may prescribe different regional value content rules for different kinds of goods.

16. New subsection 153ZOB(2) provides that the regional value content of goods for the purposes of Division 1L is to be worked out in accordance with the regulations. The regulations may prescribe different regional value content rules for different kinds of goods.

17. New subsection 153ZOB(3) provides that the value of goods for the purposes of Division 1L is to be worked out in accordance with the regulations and that the regulations may prescribe different valuation rules for different kinds of goods. The value of goods is relevant, for example, in determining whether goods satisfy the de minimis requirement in Article 3.7 of the Agreement. The value of goods is to be distinguished from the customs value of goods which is to be worked out under section 159 of the Customs Act.

18. New subsection 153ZOB(4) provides that in specifying tariff classifications for the purposes of Division 1L the regulations may refer to the HS. The product specific rules in Annex II of the Agreement refer to the tariff classifications of the HS.

19. New subsection 153ZOB(5) provides that subsection 4(3A) of the Customs Act does not apply for the purposes of Division 1L. Subsection 4(3A) provides that reference in the Customs Act to the tariff classification of goods is a reference to Schedule 3 of the Customs Tariff Act, which is not the case in new Division 1L.

20. New subsection 153ZOB(6) provides that despite subsection 14(2) of the Legislative Instruments Act 2003, regulations made for the purposes of Division 1L may apply, adopt or incorporate, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time. New subsection 153ZOB(6) is included to ensure there is an appropriate delegation of legislative power should it be necessary in order to implement the Agreement to apply, adopt or incorporate an instrument or other writing that is not an Act or a disallowable legislative instrument. For example, in implementing other free trade agreements, this provision has enabled the regulations to refer to the general accounting principles of a country other than Australia for the purposes of the regional value content calculations.

Subdivision B - Goods wholly obtained or produced in the territory of China

21. Subdivision B sets out the rules in relation to goods that are wholly obtained or produced in the territory of China.

Section 153ZOC Goods wholly obtained or produced in the territory of China

22. New subsection 153ZOC(1) provides that goods are Chinese originating goods if they are wholly obtained or produced in the territory of China; and either the importer of the goods has, at the time for working out the rate of import duty on the goods, a Certificate of Origin or a Declaration of Origin, or copy of one for the goods; or Australia has waived the requirement for a Certificate of Origin or a Declaration of Origin for the goods.

23. New subsection 153ZOC(2) provides that goods are wholly obtained or produced in the territory of China if, and only if, the goods are:

(a)

live animals born and raised in the territory of China; or

(b)

goods obtained in the territory of China from live animals referred to paragraph (a) above; or

(c)

goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted in the territory of China; or

(d)

plants, or plant products, harvested, picked or gathered in the territory of China; or

(e)

minerals, or other naturally occurring substances, taken or extracted from the territory of China; or

(f)

goods, other than fish, shellfish, plant or other marine life, taken or extracted from the waters, seabed, or subsoil beneath the seabed outside the territory of China, but only if China, has the right to exploit such waters, seabed, or subsoil in accordance with international law and the law of China; or

(g)

fish, shellfish or other marine life taken from the high seas, by vessels that are registered with China and flying the flag of China; or

(h)

goods produced from goods referred to in paragraph (g) on board factory ships that are registered with China and flying the flag of China; or

(i)

waste and scrap that has been derived either from production in the territory of China or from used goods that are collected in the territory of China and that are fit only for the recovery of raw materials; or

(j)

goods produced entirely in the territory of China exclusively from goods referred to in paragraphs (a) to (i).

Subdivision C - Goods produced in China, or in China or Australia, from originating materials

24. Subdivision C sets out the rule in relation to goods that are produced entirely in the territory of China or in the territory of China and the territory of Australia from originating materials only under section 153ZOD. Such goods are Chinese originating goods where the importer of the goods has, at the time for working out the rate of import duty on the goods, a Certificate of Origin, a Declaration of Origin, or a copy of one, for the goods; or Australia has waived the requirement for a Certificate of Origin or a Declaration of Origin for the goods.

Subdivision D - Goods produced in China, or China and Australia, from non-originating materials

25. Subdivision D sets out the rules for determining whether goods that are produced entirely in the territory of China, or entirely in the territory of China and the territory of Australia, from non-originating materials only, or from non-originating materials and originating materials are Chinese originating goods.

26. New subsection 153ZOE(1) provides that goods are Chinese originating goods if:

(a)

they are classified to a Chapter, heading or subheading of the HS specified in column 1 of the table in Schedule 1 to the regulations made for the purposes of Subdivision D; and

(b)

they are produced entirely in the territory of China, or entirely in the territory of China and the territory of Australia, from non-originating materials only or from non-originating materials and originating materials; and

(c)

each requirement that is specified in the regulations to apply in relation to the goods is satisfied; and

(d)

either:

(i)

The importer of the goods has, at the time for working out the rate of import duty of the goods, a Certificate of Origin, a Declaration of Origin, or a copy of one, for the goods; or

(ii)

Australia has waived the requirement for a Certificate of Origin or a Declaration of Origin for the goods.

27. The table in Schedule 1 to the regulations made for the purposes of Subdivision D will incorporate the product specific rules relating to change in tariff classification, regional value content and other rules for the purpose of determining whether goods are Chinese originating goods. Column 1 of this table will set out the tariff classifications, column 2 will set out the description of the goods and column 3 will set out the product specific rules.

Change in tariff classification

28. New subsection 153ZOE(2) refers to the first of the requirements that may be specified in Schedule 1 to the regulations made for the purposes of Subdivision D. It provides that the regulations may specify that each non-originating material used in the production of the goods is required to satisfy a specified change in tariff classification.

29. New subsection 153ZOE(3) provides that the regulations made for the purposes of Subdivision D may also specify when a non-originating material used in the production of the goods is taken to satisfy the change in tariff classification. Regulations made under these heads of power would include provisions to give effect to the cumulation provision contained in Article 3.6 of the Agreement, and would apply where the non-originating materials that are used or consumed in the production of the good do not satisfy the change in tariff classification.

30. The concept of the change in tariff classification only applies to non-originating materials. Goods that have been sourced from outside China or Australia and that are used in the production of other goods are non-originating materials. Goods sourced from within China or Australia that have not fulfilled the requirements of Division 1L and that are used in the production of other goods are also non-originating materials.

31. All non-originating materials used to produce other goods may not have the same classification under the HS as the final good into which they are produced. This means that the goods must be classified under one tariff classification before the production process and under a different tariff classification after the production process. This approach ensures that sufficient transformation of materials has occurred within the territory of China, or the territory of China and the territory of Australia, to justify the claim that the goods are Chinese originating goods.

32. For example, frozen fish fillets (HS 0304) are produced from fish caught in China and combined with herbs and spices from Thailand (HS 0907 - 0910) to make crumbed fish fillets (HS 1604 in Chapter 16). The applicable tariff change for crumbed fish is "a change to Chapter 16 from any other chapter". As the herbs and spices are classified to Chapter 9, these non-originating materials meet the tariff change requirement (the fish is the produce of China and is therefore an originating material and is not required to change its classification).

33. In order to determine which is the applicable change in tariff classification, the tariff classification of the final goods and each of the goods that are non-originating materials used in the production of the goods need to be known.

34. New subsection 153ZOE(4) provides that the change in tariff classification is also taken to be satisfied if the total value of all of the non-originating materials used in the production of the goods that do not satisfy the particular change in tariff classification of the goods does not exceed 10% of the customs value of the goods.

35. The provisions of subsection 153ZOE(4) incorporate the de minimis provisions that are set out in Article 3.7 of the Agreement. Therefore, even if all the non-originating materials used to produce a final good do not satisfy a particular change in tariff classification, the final goods may still be Chinese originating goods because the change in tariff classification will be taken to be satisfied.

36. The value of non-originating materials for the purposes of this section is to be worked out in accordance with the method that will be included in the regulations. Regional value content

37. New subsection 153ZOE(5) provides that the regulations may also specify a regional value content of at least a prescribed percentage.

38. New subsection 153ZOE(6) provides that if:

(a)

the goods are required to have a regional value content of at least a particular percentage; and

(b)

the goods are imported into Australia with accessories, spare parts or tools; and

(c)

the accessories, spare parts or tools are classified and invoiced with the goods and are included in the price of the goods; and

(d)

the quantities and value of the accessories, spare parts or tools are customary for the goods; and

(e)

the accessories, spare parts or tools are non-originating materials;

then the regulations must require the value of the accessories, spare parts or tools to be taken into account as non-originating materials for the purposes of working out the regional value content of the goods. Without this provision, the value of accessories, spare parts or tools would not normally form part of the value of materials that are used in the production of the underlying goods.

39. The Note to this section indicates that the value of the accessories, spare parts or tools is to be worked out in accordance with the regulations.

40. New subsection 153ZOE(7) provides that section 153ZOG should be disregarded for the purposes of subsection 153ZOE(6) when working out whether the accessories, spare parts or tools are originating or non-originating materials.

No limit on regulations

41. New subsection 153ZOE(8) provides that subsections (2) and (5) do not limit paragraph (1)(c). It is proposed that the regulations will include other requirements in addition to change in tariff classification and regional value content requirements.

42. For example, in addition to meeting a tariff change requirement, in respect of textile articles classified in the headings of Chapter 63 of the HS, except for 6308.00 and 6309.00, where the starting material is fabric, the fabric must be raw and fully finished in China or in China and Australia.

Section 153ZOF Packaging materials and containers

43. New subsection 153ZOF(1) provides that if:

(a)

goods are packaged for retail sale in packaging material or a container; and

(b)

the packaging material or container is classified with the goods in accordance with Rule 5 of the General Rules for the Interpretation of the HS provided for by the Convention then the packaging material or container is to be disregarded for the purposes of this Subdivision, except for the purposes of the exception detailed below.

44. This means that the packaging material or container does not need to satisfy the change in tariff classification test that might apply to the goods under the regulations.

Exception

45. However, subsection 153ZOF(2) provides one exception to subsection 153ZOF(1), which applies where the goods are required to have a regional value content of at least a particular percentage; and the packaging material or container is a non-originating material. The regulations must require the value of the packaging material or container to be taken into account as non-originating materials for the purposes of working out the regional value content of the goods. Without this provision, the value of packaging materials and containers would not normally form part of the value of materials that are used in the production of the goods.

46. The value of packaging materials and containers for the purposes of this section is to be worked out in accordance with the method that will be included in the regulations.

Subdivision E - Goods that are accessories, spare parts or tools

47. Subdivision E sets out a specific rule that applies to goods that are accessories, spare parts or tools.

Section 153ZOG Goods that are accessories, spare parts or tools

48. New section 153ZOG provides that goods are Chinese originating goods if:

(a)

they are accessories, spare parts or tools in relation to other goods; and

(b)

the other goods are imported into Australia with the accessories, spare parts or tools; and

(c)

the other goods are Chinese originating goods; and

(d)

the accessories, spare parts or tools are classified and invoiced with the other goods and are included in the price of other goods; and

(e)

the accessories, spare parts or tools are not imported solely for the purpose of artificially raising the regional value content of the other goods; and

(f)

the quantities and value of the accessories, spare parts or tools are customary for the other goods.

49. Therefore, under this provision, accessories, spare parts or tools will be deemed to be Chinese originating goods even if, in fact, they are non-originating goods, provided all of the requirements of this section are satisfied. However, this deeming section is to be disregarded when performing a regional value calculation on goods under subsection 153ZOE(6). The value of the accessories, spare parts or tools that are non-originating materials must be included in that calculation (see subsection 153ZOE(7)).

Subdivision F - Non-qualifying operations

50. Subdivision F sets out those operations that will be non-qualifying operations, in relation to goods.

Section 153ZOH Non-qualifying operations

51. New subsection 153ZOH(1) provides that goods are not Chinese originating goods under Division 1L merely because of the following operations or processes:

(a)

operations or processes to preserve goods in good condition for the purpose of transport or storage of the goods;

(b)

packaging or repackaging;

(c)

sifting, screening, sorting, classifying, grading or matching (including the making up of sets of goods);

(d)

placing in bottles, cans, flasks, bags, cases or boxes, fixing on cards or boards or other simple packaging operations;

(e)

affixing or printing marks, labels, logos or other distinguishing signs on goods or on their packaging; or

(f)

disassembly of goods.

52. Therefore, if any of the above operations are the only operations that take place in the territory of China, or in the territory of China and the territory of Australia, in relation to goods (either alone or as a combination), this will not amount to production in relation to the goods. For example, if non-originating goods such as spices from Japan are packaged into bottles in China, this will not confer the status of Chinese originating goods on the spices.

Subdivision G - Consignment

53. Subdivision G sets out the consignment requirements that must be satisfied in transporting Chinese originating goods to Australia, including production in other customs territories during transportation to Australia.

Section 153ZOI Consignment

54. New subsection 153ZOI(1) provides that goods are not Chinese originating goods under Division 1L if they are transported through the territory of a non-party and one or more of the following apply:

(a)

the goods undergo any operation in the territory of a non-party (other than unloading, reloading, repacking, relabelling for the purpose of satisfying the requirements of Australia, splitting up of the goods for further transport, temporary storage or any operation that is necessary to preserve the goods in good condition);

(b)

if the goods undergo temporary storage in the territory of a non-party-the goods remain in the territory of a non-party for a period exceeding 12 months;

(c)

the goods do not remain under customs control at all times while the goods are in the territory of a non-party.

55. Subsection 153ZOI(2) provides that without limiting paragraph (1)(c), the regulations may make provision for the circumstances in which goods are under customs control while the goods are in the territory of a non-party.

56. Subsection 153ZOI(3) provides that this section applies despite any other provision of Division 1L. This means that even if goods are Chinese originating goods in accordance with any other provisions of Division 1L, if they do not comply with section 153ZOI(1) they will not be Chinese originating goods.

Part 2 - Verification powers

Customs Act 1901

Item 2 After Division 4H of Part VI

57. This item amends the Customs Act by inserting new Division 4J into Part VI. New Division 4J is headed "Exportation of goods to China" and will impose obligations on people who export goods to China and who wish to obtain preferential treatment in respect of those goods in China, and on people who produce such goods.

New section 126AOA Definitions

58. New section 126AOA inserts three new definitions for the purposes of new Division 4J, as follows:

Agreement the China-Australia Free Trade Agreement done at Canberra on 17 June 2015, as amended from time to time. The Note to this definition indicates that in 2015, the text of the Agreement was accessible through the Australian Treaties Library on the AustLII Internet site.

Chinese customs official means a person representing the customs administration of the territory of China.

producer means a person who grows, raises, mines, harvests, fishes, traps, hunts, captures, gathers, collects, breeds, extracts, manufactures, processes or assembles goods.

territory of China which means territory within the meaning, insofar as it relates to China, of Article 1.3 of the Agreement and does not include the customs territory of the following members of the World Trade Organization established by the World Trade Organization Agreement:

a)

Hong Kong, China;

b)

Macao, China;

c)

Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.

World Trade Organization Agreement means the Marrakesh Agreement establishing the World Trade Organization, done at Marrakesh on 15 April 1994. The Note to this definition indicates that in 2015, the text of the Agreement was accessible through the Australian Treaties Library on the AustLII Internet site.

New section 126AOB Record keeping obligations

59. New section 126AOB inserts record keeping obligations that will apply only in respect of goods that are exported from Australia to the territory of China and that are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the territory of China. While there are record keeping obligations in the Customs Act at present, these are not broad enough to cover the record keeping obligations under the Agreement.

60. New subsection 126AOB(1) provides that the regulations may prescribe record keeping obligations that apply in relation to goods that are exported to the territory of China; and are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the territory of China.

61. It is intended that the method of keeping the documents, such as the length of time for which they must be kept and the manner in which they must be kept, will be similar to current record keeping obligations. However, the type of documents that will be required to be kept will be much broader than current requirements. The requirements will extend to all records relating to the origin of the goods for which preferential tariff treatment is claimed in the territory of China and may include, amongst other things, records associated with the tariff classification of the goods and the origin or value of the materials used to produce the goods.

62. New subsection 126AOB(2) provides that the obligations under subsection (1) may be imposed on an exporter or producer of goods.

New section 126AOC Power to require records

63. New subsection 126AOC(1) provides that an authorised officer (which is defined in Section 4 of the Customs Act) may require a person who is subject to record keeping obligations under regulations made for the purposes of section 126AOC to produce to the officer such of those records as the officer requires.

64. Under Article 3.21 of the Agreement, Australia or China may take action to verify the eligibility of goods for preferential treatment, including requesting the supply of records relating to the production or export of the goods. New section 126AOC gives effect to this Article in respect of goods exported to China and that are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in China.

65. New subsection 126AOC(2) provides that an authorised officer may disclose any records so produced to a Chinese customs official for the purpose of verifying a claim for a preferential tariff in China. Section 42 in Part 6 of the Australian Border Force Act 2015 (the ABF Act) prohibits the disclosure of protected information except, amongst other things, where the disclosure is authorised by or under a law of the Commonwealth.

66. Records obtained by an authorised officer under new section 126AOC would be protected information within the meaning of Part 6 of the ABF Act and therefore cannot be disclosed to China except as allowed by Part 6. By including an express provision in the Customs Act allowing for this information to be disclosed to a Chinese customs official, the disclosure is required or authorised by a law of the Commonwealth for the purposes of Part 6 of the ABF Act.

67. Under existing section 243SB of the Customs Act, it shall be an offence to fail to produce a record in accordance with new section 126AOC. This offence is not a strict liability offence.

New section 126AOD Power to ask questions

68. New subsection 126AOD(1) provides that an authorised officer (which is defined in section 4 of the Customs Act) may require a person who is an exporter or producer of goods that:

(a)

are exported to the territory of China; and

(b)

are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the territory of China;

to answer questions in order to verify the origin of the goods.

69. It is considered that the power to ask questions in the circumstances set out in this section is a necessary adjunct to the power to require records in new section 126AOC.

70. Subsection 126AOD(2) provides that an authorised officer may disclose any answers to such questions to a Chinese customs official for the purpose of verifying a claim for a preferential tariff in China.

71. Answers to questions obtained by an authorised officer under new section 126AOD would also be protected information within the meaning of Part 6 of the ABF Act and therefore cannot not be disclosed to a Chinese customs official except as allowed by Part 6. By including an express provision in the Customs Act allowing for this information to be disclosed to a Chinese customs official, the disclosure is required or authorised by a law of the Commonwealth for the purposes of Part 6 of the ABF Act.

72. Under existing section 243SA of the Customs Act, it shall be an offence to fail to answer a question in accordance with new section 126AOD. This offence is not a strict liability offence.

Part 3 - Application provisions

Item 3 Application

73. Subitem 3(1) provides that the amendment made by item 1 (inserting new Division 1L of Part VIII of the Customs Act) applies in relation to:

(a)

goods imported into Australia on or after the commencement of item 3; and

(b)

goods imported in Australia before the commencement of item 3, where the time for working out the rate of import duty on the goods had not occurred before the commencement of item 3. This means that if goods are imported from the territory of China before the commencement date and are still in a warehouse on that date, the new rules inserted by item 1 will also apply to them.

74. Subitem 3(2) provides that the amendment made by item 2 (the new verification powers) applies in relation to goods exported to the territory of China on or after the commencement of item 2 (whether the goods were produced before, on or after that commencement).

SCHEDULE 2 - CONTINGENT AMENDMENTS

Customs Act 1901

Item 1 Subsection 153ZOB(6)

75. Item 1 amends subsection 153ZOB(6) by omitting "Legislative Instruments Act 2003" and substituting it with "Legislation Act 2003". On 5 March 2016, the Legislative Instruments Act 2003 will be renamed the Legislation Act 2003. The amendment in this item ensures that the reference to the current Act in subsection 153ZOB(6) is updated to refer to the new Act name on that date.